LEAWOOD, KS--(Marketwired - Feb 27, 2014) -
- Parents in Kansas spend an average of $823 per month on child-related expenses
- Parents contributing to 529 Plan on average $290 each month
- BMO Harris offers tools and advice for all life stages, from planning a baby to raising a family
A new study released today by BMO Harris Bank found Kansas parents with young children spend a monthly average of $823 on child-related costs, slightly above the national average of $795. The survey found that parents planning to have a child overestimate what they will spend on their first child, but their estimate of $1,508 per month, on average, is lower than the national average estimate of $2,143. Forty-five percent of Kansas respondents recognize the need to save. However, only one-tenth of future parents in Kansas have actually started to save for kids, the lowest of states surveyed and well below the national average of 21 percent.
Of those Kansas respondents who already have children, three-quarters (76 percent) have made cutbacks to cover the cost of raising them, including 25 percent who have gone into debt. Most (79 percent), however, say they have a budget in place.
"Typically, financial priorities get switched around once a child enters the picture; and it's not uncommon for spending habits to change. Once you make the decision to have a family, it's a good idea to set up a fund dedicated to those future costs," said Brad Smith, Kansas President, BMO Harris Bank.
The study, which surveyed parents expecting to have a child in the next five years or with children less than 10 years old, found that in Kansas:
- Childcare was the greatest anticipated expense, and the estimates were close to the costs actually incurred of those future parents expecting to incur childcare expenses, they estimated the cost would be $473 per child annually, versus the $495 expected by those who currently pay for it (Nationally: $507 vs. $437).
- Those soon-to-be parents planning to contribute to a 529 Plan also expected they would put away only $178 monthly. By contrast, current parents who do contribute actually set aside roughly $290 monthly (Nationally: $303 vs. $196).
- Clothes and diapers cost half as much as future parents in Kansas expected. Future parents anticipate spending $157 monthly, while current parents say it costs them $76 per month (Nationally: $251 vs. $95).
"It is encouraging to see that expectant parents plan to save monthly for their child's education; those will be dollars well-spent," added Mr. Smith.
The results also showed what expected and new parents in Kansas consider their top financial concerns, compared to the national average:
|Saving for their children's education||78%||87%|
|The costs of raising children||83%||86%|
|The cost of living||85%||84%|
|Having enough money to retire||82%||83%|
|The value of their investments||72%||71%|
|Making their mortgage payments||46%||51%|
At a national level, the survey found:
- Most parents (85 percent) report having to make cutbacks to pay for children.
- More than a quarter (28 percent) have gone into debt.
- 82 percent of new and expecting parents have a budget in place.
"The cost of raising a child is a major outlay for households, but current and would-be parents have to be careful to incorporate these actual and expected outlays in their family budgets. This often means cutting back on spending elsewhere and exercising caution when using credit," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. "Households across America have made remarkable progress in repairing their balance sheets during the past few years. Across all households, mortgage and consumer credit peaked at nearly 125 percent of after-tax personal incomes during 2007 and it has since fallen under 99 percent, hovering around its lowest level in more than a decade."
For more information about planning for the next Life Stage, visit bmoharris.com/yourfinanciallife
Survey results cited in this release are from a Pollara survey with an online sample of 1,500 Americans (including 150 from Kansas) conducted between November 22nd and 29th, 2013. This includes 993 interviews with parents of children under 10 and 507 interviews with Americans who expect to have their first child in the next 5 years. The margin of error for a probability sample of this size is ± 2.5%, 19 times out of 20.
About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris Bank® is a trade name used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $537 billion in assets (as of October 31, 2013).